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Popular Mortgage Loans: Pros & Cons of Conventional, FHA, VA, and USDA

Popular Mortgage Loans: Pros & Cons of Conventional, FHA, VA, and USDA

Applying for your first mortgage loan can be an intimidating task. If you aren’t an experienced real estate professional, how are you supposed to know which loan is right for you? Fear not, because we’re breaking down the differences between each of the major loan types.

 

Conventional Loan

Conventional mortgage loans are the most common kind available (as the name would suggest), as well as the most popular. They are funded by private lenders, unlike the government-backed loans that are next on this list. They are a beneficial choice of loan for buyers with a stable income, good credit, and enough money for a moderate down payment.

Pros:

  • The total loan amount after fees, insurance, and interest will often be lower than other types of loans
  • Flexible repayment options (adjustable rates, shorter terms)
  • No upfront mortgage insurance fee

Cons:

  • Must pay for private mortgage insurance if your down payment is below 20%
  • Stricter qualifications (credit score, debt-to-income ratio) than other loans

Requirements to qualify:

  • A credit score of at least 620
  • A debt-to-income ratio below 43%
  • A 3% minimum down payment

 

FHA Loan

FHA loans have been helping people become homeowners since 1934. How is it done? The Federal Housing Administration (FHA) – which is part of the U.S Department of Housing and Urban Development (HUD) – insures the loan, so your lender can offer you a better deal.

Pros:

  • Low down payments
  • Low closing costs
  • Easy credit qualifying

Cons:

  • Lower loan limits
  • Must pay a monthly mortgage insurance premium for the life of the loan

Requirements to qualify:

  • A 3.5% down payment if your credit score is 580 or higher
  • A 10% down payment if your credit score is 500-579
  • A debt-to-income ratio of 50% or less
  • Documented, steady employment and income
  • Must live in the home as your primary residence
  • Must not have had a foreclosure in the last three years

 

VA Loan

The VA home loan was created in 1944 by the United States government to help returning service members purchase homes without needing a down payment or excellent credit. This historic benefit program has guaranteed more than 24 million VA loans, helping veterans, active-duty military members, and their families purchase or refinance a home. VA loans are issued by private lenders, such as a mortgage company or bank, and guaranteed by the U.S. Department of Veterans Affairs (VA).

Pros:

  • $0 down payment available
  • Private mortgage insurance not required
  • Lower interest rates than many other loans

Cons:

  • This option is only available to veterans, service members, and select military spouses
  • Must pay VA funding fee (can be financed into loan)

Requirements to qualify:

Like all home loans, VA mortgages can be complex. If you’re ready to start your VA loan, check your eligibility, or have specific questions on the VA loan, talk with a Veterans United Home Loans specialist today.

 

USDA Loan

USDA loans are mortgages backed by the U.S. Department of Agriculture as part of its USDA Rural Development Guaranteed Housing Loan program. USDA home loans are putting people in homes who never thought they could do anything but rent.

Pros:

  • Rates are usually the lowest available
  • $0 down payment available
  • Seller can pay closing costs

Cons:

  • Geographic restrictions
  • Private mortgage insurance included
  • Income limits

Requirements to qualify:

  • Home must be in a qualified “rural” area (typically defined by the USDA as having a population of less than 20,000)
  • Must not make more than 15% above local median salary
  • Must live in the home as your primary residence
  • Steady job and income, proven by tax returns
  • FICO credit score of at least 640 (this number can vary by lender)
  • Debt-to-income ratio of 41% or less in most cases

 

With this guide, you should have the knowledge to make an informed decision about the right loan for your goals. If you have further questions on the subject, you can always discuss it with a trusted real estate professional.

 

Need help with a home purchase or refinance? Contact us below!

 

Meet Sharp Loan Team Member, Maggie Moreno

Meet Sharp Loan Team Member, Maggie Moreno

What is your role at Sharp Loan and how long have you been with the company?
I’m a Sales Supervisor and I have been working for Sharp Loan since 2015.

What do you enjoy most about what you do?
What I most enjoy about being a Loan Officer is being able to help families achieve their dreams of being homeowners and help many more qualify for a better monthly payment. Throughout the 15 years I have been working in mortgages I have also met excellent coworkers who have become part of my family, and friends forever.

Can you share a memorable experience or story while working?
I have too many, but the first thing that comes to mind is a family that I met at the mall a few years ago. After learning that I was a Loan Officer, they told me about their dream of being able to own their own property. They tried many times but were always told they would not qualify. They just wanted their children to have their own spaces and for their pets to live more freely. I told them I would help them make it happen! We started from zero, working on their credit, paying off some debt, and taking care of their income so they could save some money every month for the down payment. Now they own three properties, one of them a rental unit, and they helped their parents to buy a home too.

What do you like to do in your free time when you aren’t helping clients realize their home-ownership dreams?
Traveling. I love meeting new people, seeing new places and cultures, and enjoying different kinds of food. But of course, due to the Covid-19 pandemic we cannot travel like before. I have learned how valuable it is to be healthy and to remind your loved ones how important they are. You don’t need to go far to discover new places.

What is one important skill that everyone should have?
Honesty.

Maggie Moreno
Sales Supervisor / Sr. Loan Officer
NMLS: 1143229 | DRE: 02018333
Maggie@MySL.com | 714.248.7772

 

Need help with a home purchase or refinance? Contact us below!

4 Ways to Save for a Down Payment: Buying Your First Home

4 Ways to Save for a Down Payment: Buying Your First Home

 

Is there anything that says “I achieved the American Dream” more than buying a home for your family? Homeownership in the modern age sometimes feels like an impossibility, and one of the biggest hurdles for most people is saving the money for a down payment. Luckily, there are some tried-and-true ways to make this dream a reality.

 

How Much Should I Save?

Conventional wisdom says that you should put 20% down when buying a house – but this isn’t the right solution for everyone, nor is it your only option. In fact, with a conventional loan you could be eligible to pay a much lower percentage upfront (as low as 3% depending on your financial situation). If you qualify for either a VA or USDA loan, you could skip the down payment entirely! Sharp Loan offers conventional loans, VA loans, and USDA loans. Fill out the contact form below to learn more.

There are still benefits to saving for a higher down payment, however. Putting more money down means that your interest rate will be lowered accordingly (saving you a lot of money in the long-term). And if you put at least 20% down, you won’t have to pay mortgage insurance either!

 

Ways to Save

Try these 4 tips to help you conquer that down payment!

 

1. Create a Budget

When was the last time you took an in-depth look at your finances? Even if you are normally a conservative spender, you might still find new ways to save. Online budgeting tools like Mint or PocketGuard can automate a lot of the work for you by connecting to your bank/credit card accounts and sorting your expenses into different categories, as well as offering live updates of your debts and assets. This allows you plan more effectively for your savings goals, and to spot areas for improvement in your spending!

 

2. Lower Your Expenses

Once you have a budget, it’s time to weed out your excess spending. Most people overspend in at least one category – whether it’s a few too many Postmates deliveries per month, a daily Starbucks drink, a gym membership that hasn’t been used since 2016, or more streaming service subscriptions than necessary. It happens to the best of us! Even small cutbacks in your spending can make a big impact on your savings.

 

3. Automate Your Savings

If you receive your paychecks via direct deposit, then you probably have the option to automatically send a percentage of your earnings to your savings account each time you get paid. You can also set up a monthly recurring transfer with your bank that does the same thing. This allows you to build savings consistently without the temptation to spend the extra cash elsewhere. If you’re not sure how much of your paychecks to put into savings, trying using the amount you saved by budgeting in the two previous steps!

 

4. Pay Down Your Debts

It might seem strange to spend your savings on other debts (student loans, auto loans, etc.) while trying to get a mortgage loan, but it can actually save you time and money in the long run. By improving your debt-to-income ratio before you apply for a mortgage, lenders might be able to offer you lower down payment requirements and interest rates!

 

Summary: Ways to Save for a Down Payment

If you take full advantage of the methods described above, you will be able to fulfil your American Dream in no time, and buy a home when you’re ready!

 

Need help with a home sale, home purchase, or refinance? Contact us below!

En español:

4 maneras de ahorrar para un enganche: Comprar su primera casa

 

¿Hay algo más que diga “he alcanzado el sueño americano” que comprar una casa para su familia? El ser propietario de una vivienda en la era moderna a veces parece un tanto imposible, y uno de los mayores obstáculos para la mayoría de la gente es ahorrar dinero para el enganche. Afortunadamente, existen algunas maneras comprobadas y verdaderas de hacer este sueño una realidad.

 

¿Cuánto debo ahorrar?

Los conocedores dicen que hay que dar un 20% de enganche al comprar una casa, pero no es la solución adecuada para todo el mundo ni la única opción. De hecho, con un préstamo convencional usted podría ser elegible para pagar un porcentaje más bajo de enganche (tan bajo como 3% dependiendo de su situación financiera). ¡Si califica para un préstamo VA o USDA, usted podría omitir el pago inicial por completo! Sharp Loan ofrece préstamos convencionales, préstamos VA y préstamos del USDA. Complete el formulario de contacto a continuación para obtener más información.

 

Sin embargo, ahorrar para un pago inicial más elevado sigue teniendo sus ventajas. Poner más dinero significa que su tasa de interés se reducirá en consecuencia (ahorrándole mucho dinero a largo plazo). Y si da al menos un 20% de enganche, tampoco tendrá que pagar el seguro hipotecario.

 

Formas de ahorrar

¡Pruebe estos 4 consejos para ayudarle a obtener el enganche!

 

  1. Crea un presupuesto

¿Cuándo fue la última vez que vio en profundidad sus finanzas? Incluso si normalmente es un gastador conservador, puede encontrar nuevas formas de ahorrar. Las herramientas de presupuesto en línea como Mint o PocketGuard pueden automatizar gran parte del trabajo por usted al conectarse a sus cuentas bancarias / de tarjeta de crédito y clasificar sus gastos en diferentes categorías, así como ofrecer actualizaciones en vivo de sus deudas y activos. Esto le permite planificar de manera más efectiva para sus metas de ahorro y detectar áreas para mejorar sus gastos.

 

  1. Reduzca sus gastos

Una vez que tenga un presupuesto, será hora de eliminar su exceso de gasto. La mayoría de las personas gastan de más en al menos una categoría, ya sea unas cuantas entregas por Postmates por mes, una bebida diaria de Starbucks, una membresía de gimnasio que no han utilizado desde 2016 o más suscripciones a servicios de transmisión de las necesarias. ¡Nos pasa a todos! Incluso los pequeños recortes en sus gastos pueden tener un gran impacto en sus ahorros.

 

  1. Automatice sus ahorros

Si recibe sus cheques de pago a través de depósito directo, entonces probablemente tenga la opción de enviar automáticamente un porcentaje de sus ganancias a su cuenta de ahorros cada vez que le paguen. También puede establecer una transferencia periódica mensual con su banco que haga lo mismo. Esto le permite acumular ahorros de manera consistente sin la tentación de gastar el dinero extra en otro lugar. Si no estás seguro de cuánto de su sueldo debe destinar al ahorro, pruebe a utilizar la cantidad que ha ahorrado al elaborar el presupuesto en los dos pasos anteriores.

 

  1. Pague sus deudas

Puede parecer extraño gastar sus ahorros en otras deudas (préstamos estudiantiles, préstamos para automóviles, etc.) mientras intenta conseguir un préstamo hipotecario, pero en realidad puede ahorrarle tiempo y dinero a largo plazo. Al mejorar su relación deuda-ingreso antes de solicitar una hipoteca, los prestamistas podrían ofrecerle requisitos de pago inicial y tasas de interés más bajos.

 

¡Si aprovecha al máximo los métodos descritos anteriormente, usted será capaz de cumplir su sueño americano en muy poco tiempo, y comprar una casa cuando esté listo!

 

¿Necesita ayuda con vender una casa, comprar una casa o con el refinanciamiento? ¡Póngase en contacto con nosotros a continuación!

6 Tips for Selling Your House in Summer

6 Tips for Selling Your House in Summer

 

So, you’re putting your home on the market. You researched the process endlessly online, found a good real estate agent, and you’re preparing to show your house to prospective buyers. You’ve thought of everything. Right?

 

Don’t start booking those open house appointments just yet! August has arrived, and we’re in peak summer season. As such, there are some unique challenges (and opportunities) that you need to be prepared for, and we’ve put together a list of tips to help.

 

1. We all enjoy a nice summer day, but no one likes spending time inside a stuffy, sweltering house. You need to keep the inside of your home as cool and breezy as possible. If you have central AC: now is not the time to conserve electricity – blast that air conditioner! You may even want to have an HVAC technician service it beforehand to make sure it’s running at full efficiency. If you don’t have central AC: fans are your best friend. Place them around your house strategically to create a cross breeze, allowing hot air to vent out and cooler air to replace it. Depending on the severity of the heat in your area, you might even want to consider installing window-mounted air conditioner units.

 

2. Make sure to keep your blinds and curtains drawn prior to showings, but fling them open once prospective buyers start arriving. Your house will look great with bright, natural lighting. Don’t forget to wipe down those windows first though – any streaks or smudges will be very noticeable.

 

3. First impressions are everything. Houses look their best in the summertime, but that also means drawing more attention to any aesthetic issues. Make sure there is no peeling or cracking paint on the exterior and that the front door is in pristine condition. The landscaping should look as flawless as possible, so make sure all plants (especially the lawn!) are trimmed, weeded, edged, mowed, and so on. Spend at least a week beforehand watering everything regularly to avoid dead spots in your yard.

 

4. Have a few cold drink options available for visitors. Ice water is a must, but people will also appreciate classic summer refreshments like lemonade, iced tea, or soda.

 

5. Make sure to plan ahead if you have a larger family with kids home for summer break. You may find that keeping the house tidy for your showings is more of a challenge. Consider asking a friend or family member to watch the kids for the day – or better yet, get them involved! They could pitch in with cleaning, or even be given tasks like passing out flyers or offering cold drinks to your guests if they are old enough.

 

6. If you have a decent backyard, make it a focal point of your showings. Spruce up the patio space with tables and chairs, umbrellas, and even a grill if you have one. Let people imagine themselves entertaining guests there. If you have a pool, then play that up too! Get it cleaned and arrange some lounge chairs around it for maximum effect.

 

If you made it this far then rest easy. By taking these seasonal factors into consideration, you will ensure that your house dazzles any prospective buyers that come your way.

 

Need help with a home sale, home purchase, or refinance? Contact us below!

Meet Sharp Loan Team Member, Christian Garcia

Meet Sharp Loan Team Member, Christian Garcia

What is your role at Sharp Loan and how long have you been with the company?
I am a Mortgage Loan Originator and have been with Sharp Loan since 2016.

What do you enjoy most about what you do?
I especially enjoy when a client comes to me in dire need of help and I am able to lift that dark cloud. Home financing plays a major role in people’s lives. Hearing the joy and relief in their voices when they realize that they get to keep their homes, skip a payment, or save hundreds every month… That is why I am here.

christian 1

Can you share a memorable experience or story while working?
Yes! A client of mine needed to pull cash out from her equity to fix her bathroom. No one would finance her and she needed a bathroom! She had to use friends or relatives’ homes for months to simply use the bathroom. Once we funded her loan, hearing her gratitude and relief almost brought me to tears. That always stuck with me.

What do you like to do in your free time when you aren’t helping clients realize their home-ownership dreams?
I love to spend quality time with my loved ones and explore the city! I am bit of a foodie.

What is your ideal vacation spot or favorite restaurant in Orange County?
I recently took a trip to Colombia and that was amazing! My favorite restaurant in the OC is Playa Mesa.

Christian Garcia
Loan Officer
NMLS: 1739256 | DRE: 02067055
Christian@MySL.com |

 

Need help with a home purchase or refinance? Contact us below!